During 2020, Dyrdek’s Skate Shop, Inc., had a cash flow to creditors of –$60,000 and the cash flow to stockholders for the year was $70,000. Suppose you also know that the firm’s net capital spending for 2020 was $1,320,000, and that the firm reduced its net working capital investment by $59,000. What was the firm’s 2020 operating cash flow, or OCF?

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Abiolataiwo2015id Abiolataiwo2015id · Answer 1

Answer:

$1,271,000

Explanation:

Calculation for What was the firm’s 2020 operating cash flow, or OCF

First step is to calculate the Cash flow from assets using this formula

Cash flow from assets=Cash flow to creditors + Cash flow to stockholders

Let plug in the formula

Cash flow from assets=–$60,000 + $70,000

Cash flow from assets = $10,000

Now let calculate the operating cash flow using this formula

Operating cash flow=Cash flow from assets-Reduction in Net working capital investment+Net capital spending

Let plug in the formula

Operating cash flow=$10,000-$59,000+$1,320,000

Operating cash flow=$1,271,000

Therefore the firm’s 2020 operating cash flow, or OCF will be $1,271,000

Andromacheid Andromacheid · Answer 2

The operating cash flow is $1,391,000.

Since

Cash flow from assets = cash flow to creditors + cash flow to stockholders

= $60,000 + $70,000

= $130,000

Now

Operating cash flow = Cash flow from assets - reduction in net working capital + net capital spending

= $130,000 - $59,000 + $1,320,000

= $1,391,000

Hence, we can conclude that The operating cash flow is $1,391,000.

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